23-C(1) Local Office Administrative Expense

Management Manual

Revised February 9, 2007 Title 23

Chapter C(1)

LOCAL OFFICE

ADMINISTRATIVE EXPENSE

Iowa

Department

Human Services

Title 23: Financial Management TABLE OF CONTENTS

Chapter C(1): Local Office Administrative Expense

Revised February 9, 2007 Page 1

Page

Iowa Department of Human Services Management Manual

Overview ........................................................................................................ 1

Legal Basis ................................................................................................ 1

Allowable Expenses ........................................................................................ 1

Allowable Direct Expense ............................................................................. 2

Allowable Indirect Expense ........................................................................... 2

Consistent Treatment of Costs as Direct or Indirect ......................................... 3

Unallowable Expenses .................................................................................... 3

Unallowable Direct Expense .......................................................................... 3

Unallowable Indirect Expense ....................................................................... 4

Purchase of Equipment ................................................................................... 4

Purchase of Automobiles and Related Expenses .............................................. 5

Office Space Expense ...................................................................................... 5

Office Space in a Privately Owned Building ..................................................... 6

Office Space in Public Building ...................................................................... 6

Title 23: Financial Management Page 1

Iowa Department of Human Services Management Manual

Chapter C(1): Local Office Administrative Expense Overview

Revised February 9, 2007

Overview

The Department of Human Services shall reimburse counties for the federal share of the

allowable costs of operating the Department’s local offices. Counties shall report these

costs on form 470-0033, Report of Local Administrative Expense.

The Bureau of Purchasing, Payments and Receipts will review allowability of all costs

claimed. The Bureau of Budget and Accounting will allocate allowable costs to the

assistance programs administered through the local office, based on the Department’s

current approved federal cost allocation plan.

The reimbursement rate shall be based on the composite of current quarterly federal

program matching rates for program administration, to the extent that federal program

funds are available or state funds were provided by specific legislation to supplement

federal funds.

When the reimbursement amount has been determined, the Bureau of Purchasing,

Payments and Receipts will order a state warrant to be issued to the county treasurer.

The warrants will be mailed to the Department’s local office for distribution.

Legal Basis

The legal basis for this chapter is found in:

♦ Iowa Code section 217.32, “Office space in county.”

♦ Title 2 Code of Federal Regulations, Part 225, “Cost Principles for State and

Local Governments” (formerly published as OMB Circular A-87).

♦ ASMB C-10, “A Guide for State, Local and Indian Tribal Governments.”

Allowable Expenses

Local office administrative expenses that are allowable for reimbursement include direct

and indirect expenses.

Title 23: Financial Management Page 2

Iowa Department of Human Services Management Manual

Chapter C(1): Local Office Administrative Expense Allowable Expenses

Revised February 9, 2007 Allowable Direct Expenses

Allowable Direct Expense

The following direct expenses are allowable for reimbursement:

♦ Salaries: Gross compensation paid, including employee and employer share of

benefits. This includes:

• Salaries paid from county funds for employees who are covered by 28E

agreements that conform to merit standards and are assigned to the

Department of Human Services.

• Salaries paid to employees on county payrolls who are assigned to the

Department and who are merit-exempt.

♦ Out-of-state travel for local office state employees, with prior approval of the

service area administrator or designee, provided that:

• The travel is also approved by the county board of supervisors; and

• Approval is recorded in the official minutes of the board’s meeting before

the date of travel; and

• The purpose of travel is in support of administered programs of the

Department.

♦ Office supplies, utilities, postage, rental of equipment, and other miscellaneous

expenses that are used in direct support of administered programs of the

Department.

Allowable Indirect Expense

Salaries, travel, office supplies, utilities, postage, rental of equipment, and other

miscellaneous expenses of the county that indirectly benefit, through a

“shared

cost concept,” the programs administered by the Department of Human Services

are also allowable for reimbursement.

“Shared cost concept” is defined to be any cost incurred by the county for the

joint benefit of several or all county agencies. It would be the responsibility of the

county to develop and seek approval of a “shared cost allocation plan.”

Federal regulations defining cost principles for state, local, and Indian tribal

governments provide that these costs must be documented and allocated by a

cost allocation plan, prepared in accordance with the federal cost principles.

Title 23: Financial Management Page 3

Iowa Department of Human Services Management Manual

Chapter C(1): Local Office Administrative Expense Allowable Expenses

Revised February 9, 2007 Consistent Treatment of Costs as Direct or Indirect

Consistent Treatment of Costs as Direct or Indirect

Regardless of whether a given expense is claimed as a direct or indirect expense,

consistent treatment must be given to the same or similar types of expense, and

the costs may not be duplicated as both direct and indirect costs.

Counties that have questions regarding the federal cost principles can receive

assistance by contacting:

The Division of Cost Allocation

Department of Health & Human Services

Federal Building

601 East Twelfth

Kansas City, Missouri 64106

Unallowable Expenses

Local office administrative expenses that are not allowable for reimbursement include

certain direct and indirect expenses. The following sections give examples of direct and

indirect costs that are unallowable for reimbursement but are not intended to address

every cost that is unallowable under the federal regulations.

Unallowable Direct Expense

The following direct expenses are not allowable for reimbursement:

♦ Salaries of county-paid staff that work in direct support of programs other than

those administered by the Department of Human Services, such as employees

that administer general relief programs and public health employees under

Title VI.

♦ Travel paid to county paid staff for a trip made in direct support of programs

other than those administered by the Department.

♦ Supplies, utilities, postage, rental of equipment, depreciation, and other

miscellaneous expenses directly chargeable to a program that is not

administered by the Department.

Title 23: Financial Management Page 4

Iowa Department of Human Services Management Manual

Chapter C(1): Local Office Administrative Expense Unallowable Expenses

Revised February 9, 2007 Unallowable Indirect Expense

Unallowable Indirect Expense

The following indirect expenses are not allowable for reimbursement:

♦ Any indirect county expense that is not properly documented or allocated in

accordance with federal cost principles.

♦ Any county expense allocated to county agencies other than the ones

administered by the Department.

♦ Any county expense improperly allocated to the local office of the Department.

Purchase of Equipment

County funds disbursed for the purchase of equipment for use by a local office are

allowable for reimbursement when such purchases are proper under state law. This

includes the cost of computers, desks, photocopy machines, chairs, or any of the other

items of equipment necessary to the operation of a local office.

Purchases of equipment with a unit cost of $5,000 or more must have prior approval

from the Department. All such requests should be submitted to the local office and

forwarded to the Bureau of Purchasing, Payments and Receipts.

The U.S. Department of Health and Human Services has set $25,000 as the maximum

amount that can be claimed in a lump sum as a unit cost for a piece of equipment.

Regardless of whether the local office is claiming depreciation, a record must be

maintained of all equipment purchases. The record shall contain at least the following

information: date of acquisition, cost, expected life, identification number, federal

participation percentage, and current location or disposition.

The Capital Asset Inventory Input Document, form 470-0048, satisfies these

requirements. (See

24-H and 24-H-Appendix.) Refer to 24-H-Appendix, Capital Asset

Inventory System On-Line User’s Guide, for life-expectancy guidelines.

Refer to 2 CFR Part 225 (OMB Circular A-87), “Cost Principles for State, Local, and

Indian Tribal Governments,” in 23-C-Appendix for more detailed information on federal

requirements.

Title 23: Financial Management Page 5

Iowa Department of Human Services Management Manual

Chapter C(1): Local Office Administrative Expense Purchase of Automobiles and…

Revised February 9, 2007

Purchase of Automobiles and Related Expenses

County funds disbursed for the purchase of an automobile for the sole use of the local

office in support of programs administered by the Department of Human Services may

be reimbursed when the expenditure is proper under state law. The rules governing

the purchase of automobiles are the same as outlined for other equipment.

Expenditures from county funds that are necessary for the operation and maintenance

of an automobile used solely by the local office in the administration of the

Department’s programs are matchable when the expenditure is proper under state law.

The following automobile expenses are not allowable:

♦ Expenses such as gas, oil, or repairs when mileage for the car involved has been

submitted and paid on a travel expense claim.

♦ Depreciation or expenses including gas, oil, or repairs for an automobile used for

programs other than those administered by the Department, such as general relief

programs and public health services covered under Title VI.

Office Space Expense

The service area manager shall receive for review any proposal to:

♦ Rent, lease, purchase, or build office space;

♦ Acquire additional, new, or other office space; or

♦ Remodel, repair, or decorate existing quarters.

Any such proposal shall be submitted to the Department’s Bureau of Purchasing,

Payments, and Receipts for the consideration before the county takes specific steps to

implement the proposal.

Total space costs will be evaluated by comparison to three rental estimates on form

470-4285, Rental Estimate, from reliable sources documenting a reasonable charge, in

that locality, for like space including utilities, maintenance, and other services.

Title 23: Financial Management Page 6

Iowa Department of Human Services Management Manual

Chapter C(1): Local Office Administrative Expense Office Space Expense

Revised July 31, 2009 Office Space in Privately Owned Building

Office Space in a Privately Owned Building

Funds disbursed by the county for space occupied by the local office in the form of

rent of a privately owned building are allowable for reimbursement, to the extent

that the costs do not exceed costs for a comparable space.

Funds disbursed by the county for space occupied by the local office, whether

operating costs or rent, that exceed costs for comparable space in the locality are

not allowable without the Department’s approval.

If rent is claimed on form 470-0033, Report of Local Administrative Expense, the

local office shall cooperate with the County Auditor to secure rental estimates from

three sources to ensure that operating costs or rent are not excessive. The county

shall submit rental estimates on form 470-4285, Rental Estimate.

These estimates shall consider cost of utilities and maintenance services, as

applicable. Care should be taken to be sure that services such as heat, water,

power, and janitor services, to the extent they are included in the rent, are

considered in all three rental estimates to allow a fair comparison to be made.

The Bureau of Purchasing, Payments, and Receipts will notify the county of the

allowable rental expense amount and send a copy of the notice to the service area

manager.

Office Space in Public Building

Operating costs of a public building, such as necessary repairs, may be claimed in

addition to either depreciation or building use allowance.

A county may claim only operating expenses, operating expenses plus

depreciation, or operating expenses plus use allowance. Whatever is claimed for

space cost should be evaluated by comparison in total to three rental estimates.

♦ Reimbursement of operating expense incurred by the county for maintenance

of office space for the local office in a county-owned building in lieu of rent is

allowable. Examples of allowable expenses are heat, light, power, water,

janitor services, insurance, maintenance, repairs, and maintenance of lawn,

sidewalk and parking lot.

Operating expenses must be documented with form 470-0037, Administrative

Expenses of the Public-owned Local Office, and form 470-0038, Public-owned

Local Office Expenses. Both forms must be submitted to the Bureau of

Purchasing, Payments and Receipts annually between July 1 and August 31.

Title 23: Financial Management Page 7

Iowa Department of Human Services Management Manual

Chapter C(1): Local Office Administrative Expense Office Space Expense

Revised July 31, 2009 Office Space in Public Building

♦ Depreciation to buildings and fixtures may be claimed. To document the

depreciation charge, the local office shall maintain schedules by class of asset

that show cost, expected life, date of purchase, and book value.

• Initial costs plus costs of remodeling of a county-owned building purchased

or constructed to provide space for the local office may be depreciated.

• A building use allowance may be claimed in lieu of depreciation. An annual

limit of 2% of cost is imposed to control use allowance. A quarterly charge

of 25% of the annual limit is allowable.

♦ Depreciation or building use charges must be documented by schedules

maintained in the county auditor’s office. A 2% annual limit is imposed for use

allowances.

The following expenses are not allowable:

♦ Value of land may not be claimed as depreciation or building use allowance.

♦ Major remodeling or renovation projects may not be claimed as operating

costs.

A “major” remodeling project means an expenditure made beyond the regular,

normal upkeep of physical properties (land, buildings, and equipment), for the

repair or replacement of failed or building components as necessary to:

♦ Return a facility to its currently intended use,

♦ Prevent further damage, or

♦ Make a facility compliant with changes in laws, regulations, codes or standards.

Major remodeling or renovation projects that materially increase a facility’s value

or useful life are unallowable as a direct cost. These expenses should be claimed

on the building depreciation or use allowance schedules.

Documentation shall be maintained in the County Auditor’s office to show cost,

acquisition date, and book value of each asset by class whether depreciation, or

use allowance, is claimed. No claim may be made for assets that would be

determined to be fully depreciated. Cost of land must be excluded.

The following general guidelines have been used for estimated useful life:

New buildings 30 years

Old Buildings 20 years

Remodeling 10 years

1305 E WALNUT STREET - DES MOINES, IA 50319-0114

CHESTER J. CULVER, GOVERNOR DEPARTMENT OF HUMAN SERVICES

PATTY JUDGE, LT. GOVERNOR

KEVIN W. CONCANNON, DIRECTOR

February 9, 2007

GENERAL LETTER NO. 23-C(1)-5

ISSUED BY: Bureau of Purchasing, Payments and Receipts,

Division of Fiscal Management

SUBJECT: Management Manual, Title 23, Chapter C(1), LOCAL OFFICE

ADMINISTRATIVE EXPENSE, Title page, revised; Contents, revised;

and pages 1 through 7, revised.

Summary

This chapter is revised to:

♦ Update the policies and procedures.

♦ Change the manual format to reflect the current version.

♦ Make the chapter available electronically.

Effective Date

Immediately.

Material Superseded

Remove the entire Chapter C(1) from Employees’ Manual, Title 23, and destroy it. This

includes the following:

Page

Date

Title page December 27, 1983

Contents December 27, 1983

1-3 December 27, 1983

4, 4a September 15, 1987

5, 6, 6a February 14, 1984

7 December 27, 1983

Additional Information

Refer questions about this general letter to your service area manager.

1305 E WALNUT STREET - DES MOINES, IA 50319-0114

CHESTER J. CULVER, GOVERNOR DEPARTMENT OF HUMAN SERVICES

PATTY JUDGE, LT. GOVERNOR

CHARLES J. KROGMEIER, DIRECTOR

July 31, 2009

GENERAL LETTER NO. 23-C(1)-6

ISSUED BY: Bureau of Purchasing, Payments, and Receipts,

Division of Fiscal Management

SUBJECT: Management Manual, Title 23, Chapter C(1), LOCAL OFFICE

ADMINISTRATIVE EXPENSE, pages 6 and 7, revised.

Summary

This chapter is revised to add general guidelines for estimating useful life of buildings.

Effective Date

Immediately.

Material Superseded

Remove the following pages from Management Manual, Title 23, Chapter C(1), and

destroy them:

Page Date

6, 7 February 9, 2007

Additional Information

Refer questions about this general letter to your area income maintenance

administrator, your service area manager, or your regional collections administrator.